Policy Coherence for Development and the Common Agricultural Policy

Glopolis has released a study focusing on the impacts and coherence of  the EU Common Agricultural Policy (CAP)  with the EU development policy, with a detailed look on the role of the Czech agricultural sector and the Czech agrarian foreign trade.

Developing countries are not a homogenous group.  They differ in terms of the impact of world food prices and thus of the changes in the EU agricultural policy on them. These ef fects depend on the composition of their agri-food trade, particularly if they are net exporters or importers of commodities  covered by the CAP as well as if they have a preferential access to the EU market to gain from the protection of the CAP.When analysing impacts of the CAP it is better to focus on individual countries and concrete commodities. It follows from the analyses presented in the review of literature that some exporters from Latin America (Brazil, Peru) and South-East Asia (Thailand) will benefit most from the removal of some (perhaps even all CAP instruments). In contrast, the immediate  impacts of the elimination of CAP instruments might also be negative for the net importers of food (particularly Sub-Saharan countries).

The EU Common Agricultural Policy changes.  The CAP has passed through a number of reforms since the beginning of the 1990s. The price support was substantially reduced and farmers were compensated by direct payments. These payments have been gradually decoupled from the production. Following these changes (and in the association with current high prices) the need for applying export subsidies has declined in the EU. The expenditures on export subsidies dropped from more than 10 milliard EUR at the beginning of the 1990s to only 166 million EUR in 2010. The access of developing countries to the EU market has improved hand by hand with CAP reforms. The EBA initiative offers a tariff free and unlimited access to the EU market for the least developed countries. The same level of access is given to the developing countries which concluded economic cooperation agreements with the EU.

Within the EU, the Czech Republic is one of the minor exporters and importers of agrarian products . The Czech share on the total EU-27 exports and imports to/from the third countries does not reach a half of percent (0.4 % in 2010). A more important participation is observed only in the case of specific commodities (for example poppy seed, hops etc.) or specific markets. The Czech exports of concentrated milk and cream, which have been discussed recently a lot, represent only 1.5 % of the EU-27 exports to the third countries.

The importance of the Czech agrarian foreign trade with the third countries decreased considerably after the accession to the EU. Being fully incorporated into the single market, the Czech orientation to the EU countries have increased. The overwhelming part of Czech agrarian foreign trade is directed to the EU. Czech imports are often realized through  traders in the other EU Member States (mainly Germany and Netherlands). As a result of these trade flows and of further processing of imported commodities, the original producer country does not always appear in the trade statistics. That is why, for example, Germany is presented as a main supplier of soya been oilcakes or palm oil to the Czech Republic.

The Czech agrarian foreign trade with LDCs (less developed countries), which is the most vulnerable group of countries, is not intensive (an exception is Bangladesh where concentrated milk and whey have been exported). Inconsistency of the territorial and commodity structures is characteristic for this trade too, especially for the Czech export to LDCs. The main exported commodities include concentrated milk and cream, whey, also beer, pectic substances, pectinates and pectates, malt, hops and live poultry. On the other hand, the most imported commodities from LDCs to the Czech Republic are tobacco, cof  ee, beans, tomatoes and exotic fruit. 

The beneficiaries of the Czech foreign development aid  are developing countries including also several LCDs, as well as countries of CIS and of Western Balkan. The Czech agrarian foreign rade with these countries seems to be consistent with the declared development objectives.

The Czech agricultural trade with developing countries is not big from the point of view of thetotal Czech trade, the less in the context of the EU trade. However, by no means it permits theCzech Republic to devaluate the issue of the agricultural policy coherence with the needsof developing countries . For example the definition of the coupled direct payments, whichstimulate the production growth, will jointly shape the EU agricultural output and consequently, itmight affect the world market and some concrete developing countries. Thus, the Czech Republicshould concentrate on the coordination mechanisms and push forward fair trade conditions.

The study indicates a need for further research particularly in the area of the transposition of the EUcommitment to promote the policy coherence for development at the national level. A deeper andbroader debate on the agricultural policy coherence with the needs of developing countries will beneeded between the agricultural public and governmental and non-governmental organisationspushing forward the PCD. It is especially relevant if we take into account that agriculture is anmportant sector of economies of almost all developing countries.

The study that is “available in Czech” soubor contains an English written summary.